Prospect Capital (PSEC) released its results for the June quarter yesterday, and all in all, results weren’t bad. Net investment income was flat on a year-over-year basis, and importantly, book value was stable. In fact, it actually rose by a penny to $10.31. This means that at current prices, Prospect is trading at just 68% of book value.
That’s shockingly cheap…and yet Prospect remains a heavily shorted stock:
Who in their right mind shorts something trading at 70% of book value? $PSEC Short Interest Update http://stks.co/s2kpT
— Charles Sizemore (@CharlesSizemore) Aug. 26 at 11:08 PM
Who in their right mind shorts something trading at 70% of book value? $PSEC Short Interest Update http://stks.co/s2kpT
— Charles Sizemore (@CharlesSizemore) Aug. 26 at 11:08 PM
I sound like a broken record when I say this, but management continues to buy the stock aggressively on the open market. The CEO dropped $2 million of his own money into the stock in June, and other insiders chipped in an additional $1.5 million.
Large insider buying… on a stock trading at a deep discount to book value… that is paying a 14% dividend yield… and is heavily shorted, primed for a short squeeze…
Seems like a pretty good bet to me. Unless there are some serious skeletons hidden deep in the closet that I haven’t found yet, this is a stock priced to double your money in the next 12-24 months. At the very least, there would seem to be very little in the way of downside at $7.00 per share.
Â
